Arthur Andersen LLP agreed to pay $16 million to Enron Corp. creditors to settle claims that the accounting firm was negligent in auditing and advising the energy trader, which collapsed in bankruptcy in 2001.

A hearing on whether a bankruptcy judge should approve the settlement is scheduled for May 14. The accord resolves a lawsuit filed in Houston accusing Arthur Andersen, now largely defunct, of approving transactions that manipulated Enron’s financial condition for the benefit of its executives.

“It was a long process and we’re glad we were able to reach a settlement,” Harlan Loeb, a spokesman for the creditors, said today in a phone interview. The two sides asked a judge to approve the accord in a document filed April 21 in U.S. Bankruptcy Court in New York.

Enron, based in Houston, was the world’s largest energy- trading company, with a market value of as much as $68 billion, before it imploded amid allegations of accounting fraud. Arthur Andersen, its outside auditor, was convicted by a federal jury in 2002 of obstructing an investigation into Enron’s collapse. The U.S. Supreme Court overturned that verdict in 2005.

Four former Arthur Andersen partners are winding down the company, including overseeing remaining litigation.

A call to Arthur Andersen seeking comment wasn’t immediately returned. The company continues to deny the creditors’ allegations, according to the request to approve the settlement.

‘High-Risk Transactions’

The creditors said Chicago-based Arthur Andersen “failed to fully and candidly apprise the board with respect to certain high-risk transactions orchestrated by the Enron insiders and failed to fulfill its obligations to Enron,” according to the April 21 filing.

The Enron creditors have recovered more than $22 billion, or more than 50 cents on the dollar, Loeb said. In January, Goldman Sachs Group Inc. agreed to pay $6.95 million to settle claims over some debt payments made before the energy trader’s collapse. About $128 million was distributed to creditors this month, Loeb said.

“This settlement is a clear indication that the post- bankruptcy era of Enron is drawing to a close quickly,” he said.

A federal court jury in Houston found former Enron Chief Executive Officer Jeffrey Skilling and former Chairman Kenneth Lay guilty in 2006 of deceiving investors, analysts and employees about the company’s deteriorating financial condition. Skilling is in prison. Lay died before sentencing and Lay's record was wiped clean because he died before he was sentenced or had a chance to appeal.